Residence investors are acquiring new destinations to ride out the pandemic and its aftermath, but the hazard of overpaying for so-termed substitute authentic estate is expanding.

Very last week, the U.K.’s Crown Estate—historically the residence portfolio of the British royal family members, now a semipublic collection of frequently trophy assets together with significantly of the seabed all around the island nation—showed the enchantment of considerably less run-of-the-mill true estate. The value of its marine assets pretty much doubled above the money calendar year via March, offsetting falls in its central London retail qualities. In February, oil-and-gasoline providers keen to get in advance with their green electricity transition plans bid up the price of leases on offshore wind tasks.

Not lots of buyers can own tracts of the sea mattress, but a lot are piling into considerably less common actual estate these as details and study centers. Private equity big Blackstone recently invested $3.5 billion on a portfolio of lifetime sciences labs. Fascination in these property has been escalating for decades but skyrocketed for the duration of the pandemic: 2020 was the first calendar year on report when additional dollars was spent in the U.S. on industrial houses, such as e-commerce warehouses, than on workplaces.

Commercial genuine estate bargains nevertheless are not back again where by they had been just before the crisis, but particular kinds of residence are faring better than others. In the initial quarter, income of workplaces and outlets were being down 60% in Europe in contrast with the similar period of 2020, information from Authentic Cash Analytics exhibits. Industrial attributes dipped just 7% even though apartment sales jumped more than a 3rd as institutional buyers snapped up residential assets.

The latest promotions by Blackstone, which has develop into one particular of the world’s largest authentic-estate investors, deliver a terrific illustration of the shift that is underneath way. In 2020, places of work created up just 14% of its world acquisitions by value. Just about 50 % its hard cash went on residences and a additional 30% on industrial facilities this kind of e-commerce warehouses and facts centers, according to Real Cash Analytics.